The Basque automotive sector joins together to increase business opportunities with regard to major multinationals

Acicae will undertake more complex modules with functional autonomy for assembly in the various car factories

Basque automotive component manufacturers are about to make a qualitative leap forward in their productive processes in order to increase sales to major car brands. The sector will be going into subassemblies and modules, blocks in which several parts are put together for them to be subsequently assembled in the plants of the multinationals. The idea is to place a finished shaft in the market rather than offering the bearings, the pinion gears and the other parts of the mechanism they manufacture in their different production centres separately.

The example is also valid for a door, the front of the car or the dashboard. This will make Basque companies strengthen alliances with each other at all levels and will generate synergies which will drag smaller factories along.

The major Basque manufacturers are already strong enough to reach brands directly, but there are others which enter the contracting system through second or third suppliers that pay less for the product. One step below are other companies which are able to produce parts for multinationals but unable to reach them.

“What is sought is that the whole sector takes a step forward without smaller companies staying behind”, they say in Acicae, the Basque automotive cluster. Acicae has prepared a report on “the impact and the potential” of this commitment to increasing the weight of subassemblies and modules in the Basque automotive industry.

It is an ambitious commitment but there is a sound basis for it because the comprehensiveness of the Basque sector is “a competitive advantage”, they say in Acicae. The analysis prepared by the Cluster Association identified 25 main modules or subassemblies, in 16 of which there seems to be greater manufacturing capacity.

OPPORTUNITY TO GROW 

 Likewise, there are modules in which it is not necessary to group together all the components as it is possible to handle the supply of certain specific parts and exclude some others which are not manufactured in the Basque Country. These subassemblies, made up of 3 or 4 components which are pre-assembled together, also imply “an increase in the final value of the product supplied to the client”.

When explaining the general lines of the strategy, José Esmoris, Chairman of Acicae, said that the Basque Country has “the necessary capacities to generate synergies and thus tackle the joint development, manufacture and supply of modules or subassemblies, thus increasing the value of products. Moreover, it is a good opportunity for Basque companies as far as the scope of business is concerned”.

The automotive sector of the Basque Country is noticing the change of cycle and leaving the crisis behind.  The two major manufacturers, Mercedes in Vitoria and Volkswagen in Pamplona, have recovered production capacity and are opening new work shifts and hiring staff. Other large companies such as CIE Automotive or Gestamp are making investments. And, in general, medium-sized companies are on the move and they are dragging smaller ones along. The wheel of activity is rotating again and it is a good opportunity to reinforce alliances with a view to international markets.  Basque car part manufacturers export 90% of their production. Dependence on the state is small and 50% of the sales abroad are made outside Europe.

With this trading scheme it is possible to have a considerable volume of business in the three main European markets -Germany, Spain and France, in that order- and keep growing in markets which are already a reality, such as China and India. Moreover, we must not forget America and we must strengthen positions in developing markets such as Vietnam, Indonesia and Malaysia. This way, the Basque automotive sector will be present wherever multinationals have factories.